England has lost its damn mind over tuition fees

Ok, I said I wouldn’t write over the summer unless someone of importance said something titanically stupid. Andrew Adonis, architect of former UK Prime Minister Tony Blair’s education policies crossed that line on Friday with a – yes – titanically stupid column about tuition fees, so here I am.

First, some background. Prior to 1998, the UK had a free tuition system. From 1998 to 2006 it had a system of varying tuition fees – £1,000 if your family made over £30,000 per year, and then a sliding scale down to zero if family income fell below £20,000. From 2006 to 2012, it was a flat £3,000 (rising with inflation) accompanied by the (re)-introduction of means-based grants for living costs. Loans were available to all to cover fees, meaning no one need pay a cent up-front (“free at the point of delivery” in the UK parlance), and said loans were recovered via the tax system as in Australia and New Zealand. Required repayment rates were a modest 9% of income above the threshold, which started at £10K in 1998 and rose to £15K in 2006. Loans not repaid within a given time frame were to be forgiven.

(If you’re trying to work out what those numbers mean in Canadian dollars, for most of the past 15 years PPP equivalent has been pretty close to £1 =C$1.70, so just multiply everything in this piece by 1.7 and you’ve got it).

Shortly after the 2006 went into effect, the bottom fell out of financial markets, and one of the worst-hit countries was the UK. Anticipating that major reductions in public spending were going to be necessary, then-PM Gordon Brown convened a commission to look at university finances and tuition fees which, conveniently, would not report until after the 2010 election. The resulting Browne (not the PM, another guy) Review became the basis for the post-election Tory-Liberal coalition government’s policy of i) reducing government funding to universities by over 40%, including a total elimination of per-student subsidies for teaching in the social sciences and humanities and ii) allowing universities to raise fees to up to an eye-watering £9,000 per year.

What this meant was that between loans for tuition and loans for living costs in in ludicrously-pricey London, “debt” for a three-year degree could quite easily end up at over £50,000. But to “compensate”, loans were made more generous with the repayment threshold jumped from £15,000 to £21,000 while retaining the debt forgiveness policy. In other words, the government increased student debt massively while simultaneously it harder to recover (see here for a comparison of repayment burdens in UK vs. other countries).

The results of this were predictable. Though student “debts” rose enormously, these debts were in some sense purely nominal; most predictions showed that something like three-quarters of graduates would never repay the debts and hence the government would assume their balances. What most students were signing on to was therefore not a loan but a marginal tax of 9% on income over £21,000 lasting 30 years; that is, a so-called graduate tax. The problem was that no one knew in advance whether they were signing on for a graduate tax or a loan – that would only become apparent a decade or two into one’s working career. Oh, and government would eventually end up picking up about half the total cost of loans.

Remarkably, this proved unpopular among students. So much so that Labour leader Jeremy Corbyn’s pledge to abolish fees altogether – a move which while wiping away some obvious policy lunacy would also be a massive gift to the future wealthy – was widely credited with a big upswing in the youth vote which in turn was widely credited with denying Agent Teresa May a majority in last month’s election’s, despite the fact that Corbyn’s stance on Europe and Brexit is diametrically opposed to theirs. And now that Corbyn no longer looks vulnerable to an internal coup, various Blairite Labour types are now busy re-writing the history of the last two decades to justify a 180 on a fees policy they either wrote or agreed with in spirit.

Which is where this Andrew Adonis article in last Friday’s Guardian comes in. Adonis helped draft the ’98 and ’06 fee policy changes, and he would surely have agreed with the direction (if not the full extent) of the post-Browne Review changes. Yet now, apparently, fees must be abolished. Why? Because the beautiful Labour vision, in which allowing tuition fees to rise “up to” £3,000 (up to £9,000 post-Browne) would create a functioning market in which institutions would compete like mad and multiple price-quality points would emerge was stymied by evil university vice-chancellors (i.e. Presidents) who “formed a cartel” in which all of them charged the maximum, thus stifling competition.

This is a strange and bewildering argument for two reasons. First, in none of the three fee hikes was quality-enhancing competition a primary policy goal. System expansion (and to a lesser extent, increasing per-student resources) was the primary goal in ’98 and ‘06; income maintenance in the face of swingeing public cutbacks was the goal in ’12. The policies succeeded very well in both instance without damaging access for lower-income students. Inter-institutional competition might have been a secondary goal in 2006 and a rationalization (though not a rationale) in ’12, but never the central aim. To advocate dismantling policies because they didn’t meet some secondary goal is…bizarre.

Second, and more importantly, WHAT IN GOD’S NAME DID YOU THINK WAS GOING TO HAPPEN WHEN THE FEE CAP WAS LIFTED? Higher education is a Veblen good, for God’s sake: in the absence of obvious measures of quality (rankings notwithstanding), consumers tend to judge the quality of education on things like cost and so cost and demand are not negatively correlated – in fact in some ways, higher costs drive higher demand (look at George Washington University’s fee policy and admission rates over the past couple of decades if you don’t believe me). For Adonis’ competitive fantasy to have taken place, there would have had to have been institutions eager to signal that they might have lower quality by pricing significantly below the rest of the herd -and what university would want to do that? Perhaps Adonis should name the institutions that he thought should have adopted a Walmart pricing policy.

Now to be fair, Adonis is hardly alone in his delusions about higher education competition. England is one of those rare places where the term “neo-liberal higher education policy” actually makes some kind of sense. There is a touching faith among policy makers there that a genuinely functioning competitive market is just one set of transparency tools around the corner. League tables and key information sets didn’t create a functioning market in which quality is rewarded with greater pricing power? Well, then, we’ll create the Teaching Excellence Framework (TEF), in which government will decide what quality is, and create a fee regime which will gradually create differentiated pricing by fiat. Take that, Thorstein Veblen!

But the difference between Adonis and the TEF crowd is that the latter isn’t trying to roll back two decades of policy to ingratiate themselves with Jeremy Corbyn. They aren’t running away from a policy which has been mostly effective just because they’ve suddenly realized students don’t like fees and debt (which of course is nonsense – they don’t pay up-front fees and for the most part they sign up to a 9% graduate tax/contribution not “debt” per se).

Does English fee policy need changing? Of course. The 2012 changes and subsequent amendments were as dumb as a bag of hammers. But it’s a hell of a leap from that to “time to abolish tuition”, at least for someone with pretensions to being taken seriously in policy debates. If that’s not something Adonis aspires to any more, that’s his business. But the fact that this step is being considered seriously not just by Labour but by Tories as well should be worrying to everyone. It means reasonable policy making is being thrown out the window for reasons of currying short-term favour with specific voter demographics.

In this policy field as in so many others, England appears to be losing its mind.

I believe what I said in the blog post was that they agreed with the direction if not exactly the magnitude of the policy change. Which is true.

The Browne Review was set up under Labour by Gordon Brown You can go back to pretty much any issue of the THE you like to see that the recommendations were baked in (and accepted) well in advance. Browne didn’t ask for 9000 (IIRC he asked for 6000) – but the direction was the same. And in the 2015 election, Labour policy was the exact same scheme, only at 6000. I’m therefore comfortable with the direction but not magnitude characterization.